United States District Court, W.D. Washington
ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR
SUMMARY JUDGMENT AND DENYING DEFENDANT'S CROSS-MOTION FOR
BARBARA J. ROTHSTEIN UNITED STATES DISTRICT JUDGE
action, Plaintiff Navigators Specialty Insurance Company
(“Navigators”) seeks relief from the Court as to
whether Navigators has a duty to defend Defendant Double Down
Interactive, LLC (“Double Down”) in a putative
class action lawsuit. Compl., Dkt. No. 1 at ¶ 1. The
parties have brought cross-motions for summary judgment. Dkt.
Nos. 16, 18. Having reviewed the parties' filings, the
record of the case, and the relevant legal authorities, the
Court concludes that Navigators does not have a duty to
defend Double Down in the putative class action.
Down operates Double Down Casino, an online game where
players are initially given one million free digital chips to
play casino-like games on an interactive platform. Dkt. No.
17 at 11. After players use their initial chips, Double Down
offers to sell them additional chips starting at $2.99 for
300, 000 chips so that they can continue playing the game.
Id. at 12.
Double Down is the defendant in a putative class action
lawsuit on behalf of Adrienne Benson, Mary Simonson, and all
others similarly situated (“Benson action”).
Id. at 1. Benson began playing Double Down Casino on
Facebook in 2013, and since 2016 she has allegedly lost over
$1, 000 playing the game. Id. at 10. The complaint
for the Benson action alleges unjust enrichment; violations
of Washington's gambling statute, Wash. Rev. Code §
4.24.070; and violations of Washington's Consumer
Protection Act, Wash. Rev. Code § 19.86.010.
Id. at 12-17.
2017, DoubleU Games bought Double Down. Dkt. No. 17, Ex. A.
at ¶ 24. Around that time, Double Down purchased two
claims-made liability insurance policies from Navigators.
Dkt. Nos. 1-3, 1-4. The first is SmartPolicy No.
CH17DOL331672IC (“2017-2018 Policy”), which
provides coverage for claims made between June 2017 and June
2018. Dkt. No. 1-3, Endorsement No. 5. The second is
SmartPolicy No. CH17DOL331675IC (“Runoff
Policy”), which provides coverage for claims made
between June 2017 and June 2023, but contains an endorsement
(“Runoff Endorsement”) that excludes from
coverage claims “based upon, arising from, or in any
way related to any Wrongful Act committed or allegedly
committed on or after June 1, 2017.” Dkt. No. 1-4,
Endorsement No. 5. The Runoff Policy contains several other
exclusions from coverage, including an interrelationship of
claims provision and a professional services exclusion. Dkt.
No. 1-4, Directors and Officers Liability Coverage Part,
§ 3 A.11; General Terms and Conditions, § VIII.B.
another court, Navigators is currently defending Double Down
in the Benson action under a reservation of rights. Dkt. No.
16 at 3. In this Court, Navigators alleges that it has no
duty to defend or indemnify Double Down in the Benson action
under either insurance policy. Id.
Standard for summary judgment
judgment is proper “if the movant shows that there is
no genuine issue as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). The moving party bears the initial burden of
demonstrating the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). In deciding a summary judgment motion, the court must
view the evidence in the light most favorable to the
non-moving party and draw all justifiable inferences in its
favor. Johnson v. Poway Unified Sch. Dist., 658 F.3d
954, 960 (9th Cir. 2011). The parties do not dispute any
material facts in this case. Therefore, it is appropriate for
the Court to consider summary judgment.
Choice of law
to 28 U.S.C. § 1332, the basis of the Court's
jurisdiction in this case is diversity because Plaintiff and
Defendant are citizens of different states and the matter in
controversy exceeds the sum value of $75, 000. Dkt. No. 1-1
at 1. If a defendant has its principal place of business or
is incorporated in a state, it is subject to the substantive
laws of that state when sitting in diversity. See 18 U.S.C.
§ 1332(c)(1); Hanna v. Plumer, 380 U.S. 460,
464 (1965); Byrd v. Blue Ridge Rural Elec. Co-op.,
Inc., 356 U.S. 525, 535 (1958). Defendant Double Down is
incorporated or holds its principal place of business in
Washington. Dkt. No. 1-1 at 1. Therefore, Washington state
law governs this dispute.
Standard for finding a duty to defend
there is any reasonable interpretation of the facts or the
law that could result in coverage, the insurer must
defend.” Nat'l Sur. Corp. v. Immunex
Corp., 297 P.3d 688, 691 (Wash. 2013) (en banc).
However, the insurer “will not be compelled to defend
its insured when the potential for liability is . . . tenuous
and farfetched.” Id. (“Although the duty
to defend is broad, it is not triggered by claims that
clearly fall outside the policy.”); see also Lassen
Canyon Nursery, Inc. v. Royal Ins. Co. of Am., 720 F.2d
1016, 1018 (9th Cir. 1983).